BOJ policy dissenter warns of downside risks for economy, prices

TOKUSHIMA – A member of the Bank of Japan Policy Board warned Wednesday of downside risks for the economy and prices, demonstrating a cautious view about the central bank achieving its 2 percent inflation target as the current rise in consumer prices appears to be moderate.

“I hold the strong view that greater attention should be paid to the downside risks at this stage,” Sayuri Shirai said in a speech in the city of Tokushima in reference to prices.

She said the current path toward achieving the 2 percent inflation target entails uncertainty as the pace of increase in medium- to long-term inflation expectations “appears to have moderated or become more or less flat in recent months.”

The rise in core consumer prices excluding fresh foods largely stems from the impact of a weaker yen at this stage and the increase in energy prices, she said, adding that more evidence is needed to confirm an increase in inflation expectations backed by improvement in the supply and demand gap.

Shirai was one of three Policy Board members who expressed opposition to the BOJ’s economic outlook report released in October. She proposed the adoption of a description placing more emphasis on downside risks and changing the report’s assessment that the economy has been following a path toward achieving the 2 percent inflation target “as expected” to “at a moderate pace.”

Her proposals were rejected by a majority vote of the nine-member Policy Board.

On the economic outlook, she said “the downside risks appear to be somewhat greater than the upside risks at this stage,” citing uncertainty in recovery of real exports and consumption.